DEEJAY STOCKS PRIVATE LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX 4(2)(1), MUMBAI

The Ld.CIT(A) dismissed the appeal of the assessee for years under consideration by observing as under: “4.3 In the instant case, the assessee was given multiple opportunities to comply with the notices and provide the required information. The failure to respond to notices under sections 148 and 142(1) without any reasonable cause or explanation significantly fails the assessee's position. The order indicates adherence to the principle of natural justice, as several notices and opportunities were provided to the assessee to present their case, the penalty of Rs. 30,000 seems appropriate given the repeated non- compliance. Presently, the assessee would need to demonstrate reasonable cause for nori-compliance to challenge this penalty effectively. The show cause notices issued under section 274 read with section 271(1)(b) were intended to give the assessee an opportunity to explain non- compliance. The assessee's failure to respond to these notices further justifies the imposition of the penalty. The appellant in its written submission dated 26.06.2024 has not submitted any convincing reasonable cause for total non-compliance with the statuary notices. The notices were sent by AO on the registered e-mail address of the appellant on which the present appeal notices are being sent. The email id jdedhia44@gmail.com is Last Used E-Mail ID by any ITBA User and Primary Email Id as per e-filing profile of Assessee. The only issue remains that there seem no reason by the appellant for complete non-compliance towards statuary notices. I do not find any considerable reasonable cause from the side of assessee to allow the appeal. In such circumstances, I hold that this penalty was imposed in accordance with the provisions of Section 271(1)(b) of the Income-tax Act, 1961. Overall, the AO's actions seem to be justified and consistent with the provisions of the & 4761/MUM/2024 Deejay Stocks Private Limited Income-tax Act, 1961, considering the non-compliance by the assessee and the failure to provide satisfactory explanations regarding non-compliance. Penalty of 30,000/- is sustained and the appeal of the assessee is dismissed.” Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before this Tribunal.

The Ld.AR submitted that, there was bonafide reason for non appearance before the authorities below are genuine. He submitted that, the medical treatment of the Director’s Father and demise of Director’s Mother led the situation to worsen as the Director could not pay any attention to the day to day affairs of the assessee. It was under such circumstances that the notices issued by the Ld.AO were not complied with. 4.1. The Ld.AR submitted that, the documents related to medical treatment of Director’s Father and Death Certificate of Director’s Mother would explain and substantiate the reasonableness for non appearance even before the Ld.CIT(A). He thus prayed for deletion of penalty u/s. 271(1) (b) r.w.s.273B of the act. 4.2. On the other hand, the learned Departmental representative strongly supporting the order of the Commissioner of Income-tax (Appeals) submitted that the Assessing Officer has given sufficient time for the assessee to appear for hearing. The assessee neither appeared nor sought any adjournment, therefore, the Ld.AO was right in levying of penalty for non-compliance with the statutory & 4761/MUM/2024 Deejay Stocks Private Limited notices issued under sections 143(2) and 142(1) of the Act and his order should be upheld. We have perused the submissions advanced by both sides in light of records placed before us.

Admittedly, there was a failure on the part of the assessee to respond to the noticed issued by the Ld.AO during assessment proceeding. However, the Legislature provides for immunity from levy of penalty wherever there was a reasonable cause for not complying with the provisions of the Income-tax Act. In other words, section 273B provides for immunity from penalty wherever there was a reasonable cause. 5.1. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or guilty of conduct, contumacious or dishonest, or acted in conscious disregard to its obligation. Penalty will not also be imposed merely because it is lawful to do so. 5.2. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on consideration of all relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from & 4761/MUM/2024 Deejay Stocks Private Limited a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. 5.3. In the present facts of the case, the Director who underwent huge emotional hardship was the key person responsible for the tax disputes of the assessee. It is also not contradicted that the medical documents filed by the assessee related to the parents of the said Director is false. Therefore, there was sufficient cause on behalf of the assessee for not able to respond to the notices issued during the assessment proceedings due to illness of the Directors father and demise of his mother, along with the fact that assessee had changed the professional during the year to act upon the tax disputes. 5.4. Therefore, the assessee is entitled for exemption under section 273B of the Act. In view of the above, we are unable to uphold the order of the authorities below. We thus direct to delete the penalty levied under section 271(1)(b) of the act in the hands of the assessee. Accordingly the grounds raised by the assessee stands allowed. In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open court on 20-12-2024.